Key takeaways

In Taylor Construction Group Pty Ltd v Adcon Structural Group Pty Ltd [2023] NSWSC 723, the Court considered whether the respondent contractor, Taylor Construction Group (Taylor), who had previously argued payment claims issued by its subcontractor Adcon Structural Group (Adcon) were invalid, could change its position to suit in later Court proceedings.

Her Honour Justice Rees determined that principles of approbation and reprobation did not apply, and Taylor could change its position about the validity of payment claims in later Court proceedings.

This case serves as a key reminder that:

1. Only one payment claim can be issued after termination of a construction contract
2. Parties should take their own advice as to the validity of claims, and not re-issue claims or issue new claims just because a respondent alleges the claims to be invalid, and
3. If re-issuing claims particularly after termination, a claimant should make it clear to the respondent that the prior claim is formally withdrawn.

What happened?

In 2021 and 2022 Taylor engaged Adcon to supply structural steel for two separate projects at Ingleburn and Banksmeadow (Contracts).

By April 2023 the parties were in dispute about whether Adcon was in breach of the Contracts. On or before 11 April 2023 the Contracts were both terminated.

Following termination in April 2023, Adcon issued payment claims to Taylor under each Contract pursuant to the SOP Act (First Payment Claims). Taylor responded with separate payment schedules asserting for various reasons that each of the First Payment Claims were invalid and could not be the subject of adjudication.

In May 2023, Adcon issued further payment claims under each Contract without withdrawing the First Payment Claims (Second Payment Claims). No adjudication applications were made with respect to either the First Payment Claims or Second Payment Claims.

Taylor commenced proceedings seeking to permanently injunct Adcon from making adjudication applications under the SOP Act with respect to the Second Payment Claims. Taylor argued, contrary to its earlier position, that the First Payment Claims were in fact valid. Accordingly, Taylor argued that the First Payment Claims exhausted Adcon’s entitlement to make one payment claim after termination in accordance with section 13(1C) of the SOP Act, and that Adcon was not entitled to issue the Second Payment Claims, which were invalid.

Adcon argued that it was entitled to accept Taylor’s earlier contentions, that the First Payment Claims were invalid, and treat those claims as of no effect for the purposes of the SOP Act. Accordingly, the Second Payment Claims were valid. Adcon argued that Taylor should not now be permitted to assert that the First Payment Claims were valid, so as to invoke section 13(1C).

Adcon relied on previous authority of The New South Wales Netball Association Ltd v Probuild Construction (Aust) Pty Ltd[1] where Probuild had argued at adjudication that an adjudicator had jurisdiction to determine a dispute under the SOP Act, and then changed position and sought to set aside the adjudicator’s decision for lack of jurisdiction when the result proved unfavourable. Justice Stevenson described Probuild’s conduct as “opportunist”, seeking to “approbate and reprobate”.

Justice Rees determined that the First Payment Claims were valid and accordingly Adcon was permanently restrained from making adjudication applications for the Second Payment Claims. Her Honour declared that Adcon’s entitlement to issue further payment claims under both contracts was exhausted pursuant to section 13(1C).

In reaching that conclusion, Justice Rees confirmed that section 13(1C) of the SOP Act only allows a claimant to make one single claim after termination of a construction contract. Her Honour noted that whilst a payment claim may be withdrawn and replaced to not fall foul of section 13(1C), a party’s decision to change its position in later proceedings has no bearing on the terms of that section which are themselves instructive; “the application of section 13(1C) of SOPA does not involve the exercise of discretion”.[2]

Further information / assistance regarding the issues raised in this article is available from the author, Sarah Hammond, Partner, Emily Barnett, Paralegal, or your usual contact at Moray & Agnew.